Incentives for Efficient Multifamily
Construction through Utility
Allowance Calculations in Florida
FSEC-PF-457-14
August 21, 2014
Author
Dave Chasar
Florida Solar Energy Center
Presented at
2014 ACEEE Summer Study on Energy Efficiency in Buildings
Copyright © 2014 American Council for an Energy Efficient Economy
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thereof.
Incentives for Efficient Multifamily Construction Through Utility
Allowance Calculations in Florida
Dave Chasar, Florida Solar Energy Center
ABSTRACT
Florida recently implemented a new method for determining utility allowances for low
income housing tax credit (LIHTC) properties that provide new incentives for energy efficient
construction. These incentives have driven one multifamily developer to exceed minimum
energy code by 40% in new developments since 2011 encompassing over 1,400 residential units
in 15 properties. All new units are rated by RESNET-certified Home Energy Raters with a
typical HERS index in the 50s and 60s.
A unique scheme using results from the Home Energy Rating System (HERS) provides
the raw data for projecting annual utility allowance figures. Details of this method are presented
along with specifics of the systems-engineered package of measures driving the savings.
Highlights include the successful use of heat pump water heaters, SEER 15 heat pumps,
fluorescent lighting, Energy Star appliances and high performance envelope specifications.
HERS results from over 1,400 units show an average value of 56, ranging from 48 to 68.
Further improvement is evident in the 487 units built during 2013 with average HERS scores of
53, demonstrating the power of this incentive to push energy efficiency in a building sector that
has traditionally been difficult to reach. Costs are borne by the developer and recouped through
increased rents. While higher rents have the potential to decrease demand for these units, there
has been no noticeable reduction in tenancy from typical levels of 95 to 100%1.
Introduction
Atlantic Housing Partners (AHP) is an affordable multifamily developer with a
substantial portfolio of more than 24,000 units at 112 communities, primarily in Florida. AHP
has participated in research with the Florida Solar Energy Center (FSEC) since 2003 steadily
improving the efficiency and durability of their construction with assistance from the Building
America (BA) program2. The primary goal of the BA program is to conduct research to develop
market-ready energy solutions that improve the efficiency of new and existing homes by 30%50%3. The program consists of targeted research, industry partnerships, and collaboration with
related DOE residential initiatives. In addition to energy savings, the program also focuses on:




Improved occupant health through effective indoor air quality.
Higher comfort levels in all rooms throughout the home.
Durable and moisture-resistant building designs.
Increased builder profitability.
1
LIHTC properties require a restricted rent structure with a fixed allowance for utilities. Increased rents are thus
theoretically offset by the lower utility cost.
2
Building America is a U.S. Department of Energy program with multiple team contractors. FSEC’s team is the
Building America Partnership for Improved Residential Construction (BA-PIRC).
3
As compared to 2009 energy codes for new homes and pre-retrofit energy use for existing homes
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Achievement of these goals is documented here for multifamily housing built costeffectively and on a large scale. Energy performance of the improved specification package was
documented (Chasar and Martin 2013) through modeling a typical unit with Building America’s
benchmarking software (BEopt E+ 1.4) as well as through hundreds of certified HERS ratings
that demonstrate a consistent level of efficiency achieved. While BA has conducted similar
efforts for attached housing in hot-dry (Dakin et al. 2012), cold (Aldrich 2012), and marine
(Gordon et al. 2012) climates, little work has been done to demonstrate achievement of BA goals
in this housing sector in hot-humid climates. A key aspect of this research includes how
efficiency packages can be optimized in the context of multifamily rental housing built with the
benefit of low-income housing tax credits. This funding mechanism requires restricted rents
according to affordability criteria for the region plus an allowance for tenant-paid utilities. Rent
can thus be increased by the amount of any reduction in the allowance.
The Low-Income Housing Tax Credit (LIHTC) is an indirect Federal subsidy used to
finance the development of affordable rental housing for low-income households. The program
was enacted by Congress in 1986 to encourage private markets to invest in affordable rental
housing. It is based on Section 42 of the Internal Revenue Code and has the following eligibility
requirements (HUD 2014):




Be a residential rental property.
Commit to one of two possible low-income occupancy threshold requirements.
Restrict rents, including utility charges, in low-income units.
Operate under the rent and income restrictions for 30 years or longer.
LIHTC benefits are allocated competitively at the state level where eligibility
requirements, including rent plus utilities, are enforced. The allowance for each apartment’s
utility cost is typically estimated by local housing authorities, based on comparable properties or
by special request from a utility company. In 2010, a simulation-based alternative was
introduced by the Florida Housing Finance Corporation enabling customized energy cost
estimates that account for energy efficiency measures that may not be present in otherwise
comparable properties. Reduced annual energy use determined by the simulation alternative
provides the basis for lower monthly utility allowances and a corresponding increase in rental
income for the developer.
The simulation-based method provides the tailored approach needed to estimate payback
of energy efficiency investments. The method described here uses the Home Energy Rating
System (HERS) whereby detailed building construction and equipment information is verified
through on-site audit and duct and envelope leakage performance testing. Results are
documented by a certified energy rater, entered into approved software and submitted to a
provider where they are subject to quality control. All levels of the rating process are overseen
by the Residential Energy Services Network (RESNET) which has made steady strides since
1995 establishing a robust home energy rating industry.
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Energy Efficiency Specifications
Development of the High Performance Package
A critical early step to enhancing the performance of AHP multifamily units was
implementing a duct sealing procedure and incorporating it into the mechanical plan section of
construction documents. This included step-by-step procedures (see Appendix A) on the use of
foil tape, mastic, glass fab mesh, duct board components, and flex duct take-offs, as well as
guidance on sealing interfaces between ducts and drywall. As illustrated in Figure 1, proper air
sealing practices during construction are particularly important where ducts are located between
floors that later become difficult to access. Ducts in top floor units are located in the vented attic.
Initial random duct testing revealed that many units were already meeting high performance
leakage targets of 3 to 6 cubic feet per minute (CFM) per 100 ft2, but occasional outliers had
much higher leakage rates. Recent duct testing results from over 1,400 units now show average
leakage to out (Qn) of 0.024 or 2.4 CFM per 100 ft2 of floor area. New procedures implemented
on current construction have all but eliminated high leakage outliers.
Figure 1. Detail of typical air handler unit illustrating limited access to supply ducts. Source: Slocum
Platts Architects, reprinted with permission.
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Figure 1 also shows details for an outside air duct which was made a standard feature in
2007 in response to high indoor humidity reported at some communities during the winter. The
dedicated outside air duct provides 30 to 75 CFM (depending on apartment size) of supply
ventilation to the return plenum whenever the air handler operates. This ventilation strategy
introduces intermittent, limited quantities of conditioned outside air and has proved successful in
thousands of Florida homes with no known moisture-related complaints reported (Chandra et al.
2008). Improved air conditioner sizing procedures were also instrumental in reducing indoor
humidity levels. Cooling loads tend to vary widely with apartment size, orientation, and location
in the two- to three-story designs which led to many units with over-sized cooling systems.
Oversized air conditioners (A/C) tend to meet the cooling set point more quickly thus reducing
dehumidification. A refined A/C sizing procedure has demonstrated size reductions of up to 1ton per apartment.
Enhancement of the High Performance Package
The developer spent considerable effort examining the cost-effectiveness of further
efficiency upgrades. The increasing availability of heat pump water heaters (HPWH) and
analysis by FSEC showing greater savings with an all-electric design resulted in the developer
suspending construction of properties with gas utilities. The enhanced, all-electric package also
includes a 15 SEER heat pump and progressively greater amounts of fluorescent lighting. Table
1 shows the details of this package including average performance testing results and HERS
scores from 1,421 of the most recently constructed units.
Table 1. Construction, equipment and performance details of 1,421 apartments recently
constructed by Atlantic Housing Partners
Component
Construction styles
Component Type and/or Value
1-story and 2-story townhomes and single level
apartments in 3-story buildings
Construction type
Wood-frame
2
Slab-on-grade / 644 (1BR) to 1,562 (4BR)
Floor type /area (ft )
Attic /roof type
Vented / medium colored shingle
Window type
U-value 0.35, SHGC 0.30
Glass/floor area
6% to 10%
Insulation attic/wall/floor
R-30 / R-15 / R-0
Exterior wall cladding
Medium colored cement board
Space conditioning
SEER 15 heat pump
Thermostat
Programmable
Ventilation
30 to 75 CFM (runtime at return plenum)
Water heater
50-gal HPWH (in all but one project)*
ENERGY STAR appliances
Refrigerator, dishwasher
Fluorescent lighting
84% average (range: 10% to 100%)
Infiltration (ACH50)
6.1 average (range: 2.3 to 13.6)
Duct leakage Qn
0.034 average (range: 0.008 to 0.154)
HERS Index Score
56.0 average (range 48 to 68)
*Standard electric tank water heaters were used in one project totaling 90 units
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Utility Allowance Calculations
Home energy rating inputs and results must be submitted to an approved provider such as
the Florida Solar Energy Center (FSEC) to document and audit the process. Stored data typically
include input parameters and HERS results but the rating software also generates energy outputs.
The resulting simulated energy use of each individually rated unit can thus be extracted, sorted
into bedroom types (i.e. 1 or 2 bedrooms, etc.) and converted into energy allowance figures.
After applying local utility rates, taxes and fees, results are ready to report to the State finance
agency.
The developer began analyzing the cost-effectiveness of this approach with preliminary
allowance figures estimated from building plans, equipment specifications and samples of
building leakage performance. Various options were investigated to optimize efficiency resulting
in the package detailed in Table 1. Construction specifications prior to this exercise were already
above minimum energy code due to superior building envelope construction including higher
levels of insulation and better windows. Optimization thus focused on equipment efficiency
improvements and whether or not to include gas appliances. While including natural gas service
was previously driven largely by favorable utility incentives, it now introduced an additional
monthly meter fee into the allowance calculation. This and two other reasons influenced the
current choice to suspend the use of gas utilities: 1) the relatively small cost of space heating in
Central Florida (especially in well-constructed multifamily housing) and 2) the wider availability
of heat pump water heaters.
Home Energy Rating Details
Rating results were compiled for 1,421 units from 15 Central Florida developments
constructed between 2010 and 2013. These units had construction and equipment specifications
that were largely standardized within the company except for fluorescent lighting and water
heating which varied at a few projects constructed during 2011. HPWHs are being specified on
all new AHP projects, but one 90-unit project used standard electric tank water heaters instead.
Fluorescent lighting was used only sparingly in the past (lighting roughly 10% of floor area), but
the company has experimented with higher levels on new projects and is now specifying 100%
fluorescent lighting as standard. There was also a natural variation in duct and envelope
tightness; however, on average, these measures were found to be adequate for high performance
construction in Central Florida.
Compiled HERS results yield an average score of 56.0 ranging from a low of 48 to a high
of 68. Figure 2 illustrates the HERS Index score variation between the units and shows the
majority of units score in the 50s.
©2014 ACEEE Summer Study on Energy Efficiency in Buildings
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Figure 2. Distribution of HERS index scores for 1,421 rated units constructed from 2011 through 2013.
A closer look at more recently constructed dwellings suggests a level of improvement
over time. Figure 3 represents rating results of the last 487 units built during 2013. HERS for
these units range from 48 to 58 with an average rating of 52.8.
Figure 3. Distribution of HERS index scores for 487 rated units constructed during 2013.
©2014 ACEEE Summer Study on Energy Efficiency in Buildings
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These most recently constructed units represent one third of the full sample and stand out
from the rest due to substantially lower duct leakage, 100 percent fluorescent lighting and all
heat pump water heaters (HPWH). The HPWH has proven the single most effective measure for
reducing energy use compared to the developer’s previous standard package.
Heat Pump Water Heaters: Benefits and Challenges
While the energy savings benefit of HPWHs is becoming ever more evident especially in
warm climates (Parker et al. 2013), they do come with unique challenges not encountered with
other choices including noise, space requirements, cold air discharge and the need for a
condensate drain. Quarterly maintenance is highly recommended to maintain the air filter and
condensate drain. A survey of managers at the first seven communities to receive HPWHs
covering over 750 installed units (Chasar and Martin 2013) yielded positive feedback overall but
noise topped the list of tenant complaints. The noise issue is being addressed through
architectural changes that help isolate the HPWH from occupants while allowing for air transfer
with the dwelling to take advantage of the free cooling it provides. Survey results suggest general
tenant acceptance of HPWHs which now amount to nearly 1,500 installed units at 16
communities.
Additional problems were documented in a phone conversation with the developer’s head
of maintenance (D. Sanders, National Maintenance Director, Concord Management Limited,
pers. comm., March 4, 2014) which detailed intermittent problems as well as more serious issues
with one HPWH model at two sites. HPWH service calls can normally be handled by on-site
maintenance personnel but the complicated nature of this device sometimes requires a factorytrained technician for diagnosis. Sophisticated parts are not always readily available, requiring
extended use of expensive back-up resistance water heating during downtime. In a few extreme
cases where function is completely lost, a standard electric unit is needed to temporarily provide
hot water. Two properties experienced more extensive HPWH failures which were handled
directly by the manufacturer. A new HPWH model by the same manufacturer is claimed to be
quieter and to date has experienced no major failures after installation at properties completed in
2012 and 2013.
Conclusions
One multifamily developer in Florida has made progressive strides to improve the
efficiency and durability of their developments. Recent energy upgrades such as heat pump water
heaters, 15 SEER heat pumps and increased use of fluorescent lighting enable newly constructed
units to achieve 40% energy savings above the Building America Benchmark, correlating to
HERS Index scores in the 50s and 60s. The commercial viability of the high performance
specification package is demonstrated through widespread incorporation in over 1,400 units.
This is made possible, in part, due to a simulation-based method for calculation of utility
allowances available to developments funded by low-income housing tax credits. The
simulation-based method assigns value to the energy savings, which are returned to the
developer through increased rents. Tenants benefit from enhanced humidity control, comfort and
indoor air quality resulting from a systems-engineered package which includes right-sized
HVAC systems, mechanical ventilation, and performance testing of duct and envelope leakage to
manage uncontrolled air flow. Heat pump water heaters are a particularly important energy
©2014 ACEEE Summer Study on Energy Efficiency in Buildings
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saving component but the benefit comes with unique installation and maintenance challenges as
experienced with nearly 1,500 installed units.
Acknowledgements
This work was conducted with support from the US Department of Energy (DOE)
Building America program, under Subcontract No. KNDJ-0-40339-03. The support and
encouragement of DOE program managers Eric Werling, Sam Rashkin, and David Lee, and
National Renewable Energy Laboratory technical managers David Roberts and Stacey Rothgeb,
are gratefully acknowledged. This support does not constitute DOE endorsement of the views
expressed in this paper. Assistance gathering rating inputs and results from many hundreds of
files was provided by Jeff Myron, Jody Cummings, Billy Bauman and Ryan DiMaria, all of the
Florida Solar Energy Center.
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©2014 ACEEE Summer Study on Energy Efficiency in Buildings
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Appendix A – Duct Sealing Procedures
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